[Scott] Coming up on "Energy Switch," we'll look at grid-scale batteries.

- The problem with electricity is, we have to produce it largely in the instant we consume it, and so we have to plan for those peak hours.

What we used to do is we would tune power plants up or down.

They don't particularly like that.

The battery takes and absorbs those fluctuations.

- We are extracting the resource to build these batteries from the earth.

Are we doing much of that mining for lithium here, or is it...?

- There is plenty of lithium to go around and fortunately it is fairly widely dispersed, but there will need to be a concerted effort to open up and develop those resources.

[Scott] Yeah.

Next on "Energy Switch," batteries for the grid.

[Narrator] Funding for "Energy Switch" was provided in part by, The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

[upbeat music] - I'm Scott Tinker, and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles, and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn, and illuminate, and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

Batteries on our power grid use small cells, but hundreds of thousands of them organized in shipping container size buildings to create batteries several acres in size.

They could balance the intermittency of wind and solar along with the normal irregularities of the grid, and they're becoming more affordable.

I'll discuss these potential benefits and associated challenges with two career battery experts.

John Zahurancik is president of the Americas for Fluence, a battery storage company.

Before that, he was president of AES, an electricity generation and storage company.

Paul Denholm is a senior energy analyst at National Renewable Energy Laboratory where he has studied batteries and other energy technologies for 20 years.

On this episode of "Energy Switch," we'll look at the growing importance of grid-scale batteries.

Well, welcome.

Glad you guys are both here.

Let's just start with big picture stuff.

What's the most prominent kind of battery we're talking about?

- So nearly all of the batteries that are being deployed right now for stationary applications, for grid applications, are lithium-ion batteries.

- Okay.

- So these are similar to the, the ones if you're familiar with electric cars.

And they have the same basic chemistry.

There's some changes that are made to make it more suitable for stationary applications.

But the vast majority of these are lithium-ion batteries.

- Okay.

I mean, intermittent generation, solar and wind, not judgment, just the physics, night comes along and clouds and wind goes away.

Can batteries back that up?

Are they good for that application?

- So batteries an excellent resource to help us address the fact that yes, the sun does not shine at night, the wind doesn't always blow.

And so what we're seeing is during summertime peak, so in that late afternoon when it's really hot outside, people are cranking their air conditioners.

We fire up, traditionally fire up these peaking generators-- - Peak, and those are what source of energy?

- So these are traditionally gas-fired generators.

So next time you're on an airplane, you look out the window, that engine, that engine literally is the same thing that is used by many, many utilities.

There's thousands of these power plants where the thrust of that engine is just used to drive an electric generator.

- So the demand peaks, and we need something to fill that peak.

- That's right.

- And that's a, that's a jet engine.

- Yeah, yeah.

- Basically, running on?

- Natural gas.

- Good.

- So the nice thing about solar is when it's hot out, it's almost typically sunny, the problem though is that the solar output doesn't exactly align with when we use electricity in that late afternoon, early evening.

So right when the demand is peaking, kind of 5:00, 6:00 PM, that's when the sun is starting to go down a little bit.

So you see a drop off in solar production.

And that's when the battery can come online, and then it'll start discharging in the afternoon to meet that peak demand.

- Gotcha.

- And that window's only a few hours long.

So a battery with just a few hours of storage can meet that peak and really help enhance the grid.

- Even if we take renewables out of the picture, you know, when I started working in large-scale batteries was back in 2006, 2007, - Right.

- we had a much different picture.

We didn't nearly have the volume of renewables.

And at that time, you still had this difference between peak and off-peak demand and you still had these moment to moment mismatches between, you know, power consumption and power generation.

The transmission line got crashed into and the line fell, and you know, we have to manage around that.

And what we used to do is, we would tune power plants up or down.

They don't particularly like that.

The battery takes and absorbs those fluctuations.

- Right.

- That job existed long before renewables.

It exists now; we have to balance in real time.

When we're not using a lot of electricity, there's plenty of it, right?

So overnight people don't use as much in the cool months of the year, people don't use as much generally.

But the problem with electricity is, we have to produce it largely in the instant we consume it, and so we have to plan for those peak hours.

So there's a huge installed base.

Hundreds, well, nearly a thousand of these peaking plants that operate less than 15% of the time.

You know, and when they do operate, they operate for two or three hours.

- The batteries will be used for the same purpose essentially though, to meet the peak demand.

- They don't actually do the same job.

And there's a couple reasons for that.

So when you have a gas peaker, a diesel peaker, something like that, you don't turn them on at all unless you're really at the peak.

So most of the year they just sit there and they have to be maintained.

With a battery, I don't have to make the decision to turn it on or turn it off.

It's ready all the time.

And so if I just need it for 30 seconds.

I need it for four minutes.

- Sure.

- I can't turn the gas peaker on to do something for four minutes and turn it off.

It doesn't work that way.

- Right.

- With the battery, I have that available at all times.

So the battery's actually doing reliability jobs at all moments of the year, just in a smaller way.

And then it's available for those big peaks on a daily basis and those big peaks on a seasonal basis.

- Okay.

So like a typical peaker might be 100, 200, 300 megawatt?

- Absolutely.

- Is that plus or minus?

- Absolutely.

You'll see them in different sizes, but they often build these plants in kind of blocks.

You might see like five 100-megawatt peakers.

But some places, you know, 2, 300 megawatts.

So yeah, a Walmart sized battery replacing one kind of typical peaking plant.

[Scott] Right.

- One of the nice features about batteries is, they're inherently modular, if you build the system the right way.

So you're not putting down one block like a Walmart, you can decide, you know, if this is an area that needs more and it's advantageous to build it bigger, you can build more blocks there.

If it's an area that's smaller, like we do some things where you're in more of an urban area inside a city, you do smaller blocks and you distribute them around.

- That's a nice feature if you will.

We mentioned redundancy, John, and per peakers, they're expensive 'cause they run 10 to 15% of the time.

Why are batteries more affordable?

- Part of it is, one, they've, the cost of batteries has been coming down very, very quickly, right?

So we're seeing as we scale up the production of batteries, as we do larger and larger systems, we're learning how to build the system for less cost.

It's easier to site, so you have less time and money tied up in the development, and more flexibility about where you can put it.

So those are cheaper than building a peaking plant today.

But the other part of it is, is that you can use that battery more frequently than you would use that peaking facility.

- Okay.

- That battery facility can be used for those moment to moment fluctuations that occur all the time.

- I really wanna emphasize one element of this is, we've gotten to the point where you can forget about renewables and storage is still cost effective.

So given the combined function of replacing that physical hardware, not needing to purchase natural gas, you're still purchasing electricity but you're doing it during kind of off-peak periods when price of electricity is low, plus all these other enhancements functionalities that storage provides.

So even if it doesn't do anything to support renewables, it still pencils up.

Now obviously if natural gas was, you know, a dollar per million BTU, that'd be another story.

But, you know, kind of, you know, normal reasonable gas prices.

I can make storage beat out a new gas plant.

- Right.

Gotcha.

Twenty-five thousand megawatts nationally, plus or minus growing quickly.

What's our electric grid?

I don't know the number.

- So we've got about 1,000 gigawatts of total installed generation capacity.

- But that's the total demand.

That's not the, that's not the peak, the peaking demand.

- So the peak demand in the country is about 600 gigawatts.

[Scott] Oh it is?

- So we have, we, - I didn't realize that.

- we overbuild the power system for a lot of different reasons, primarily to maintain reliability, but yeah, when demand peaks, it's about 600 gigawatts.

- Okay.

So what's the typical hours of battery storage?

I mean, how much do we need for the typical use?

- So a very large fraction of the batteries going in right now have four hours of duration.

And that's actually based on some rules, people saying, okay, we wanna make sure that we have a reliable grid.

So you wanna make sure that a utility has enough duration to meet that peak.

And so a lot of places in, in the country have said, okay, you need four hours because that late afternoon early peak is roughly four hours long.

- What limits the amount of hours?

Let me ask it this way.

You have a battery, it has some amount of energy stored in it, and the demand for that is going to pull it out.

So it's the amount of demand pulling it out that gives you four hours.

If it was less demand, it would last longer?

- Yes.

It can always operate more slowly than that.

So if you say at its peak rate, the system could supply energy for four hours.

If you were at half its peak rate, it could supply energy for - Eight hours.

- eight hours roughly.

So it's fairly symmetrical like that.

And we do see some systems that use it that way.

They, you know, might more rapidly charge, like, to take advantage of let's say a, an abundance of energy in a period that's very low cost, it'll charge rapidly and then discharge over a longer period, maybe overnight when power is, you know, is needed or the sun's not shining.

- Yeah.

- So you can do that.

The main thing that's driving the sizing of these systems is economics.

You know, we started with systems that were 15 minutes in duration.

We went to an hour, we've gone to two hours, four hours.

We've deployed some systems that are five hours in length.

And most of that's been a function of the declining cost of the battery.

- I mean, there's a floor obviously to anything, how close to it are we?

- You know, the floor seems to keep moving.

[both laugh] So... - It's an elevator.

- You know, I think what we're seeing is, the benefits of rapid scale up that these batteries are produced in factories.

They're highly automated.

A lot of the materials are relatively available.

And so we've seen a rapid decline.

First systems that we were buying and putting online in 2008 are on the order of $3,000 a kilowatt hour.

And now we're seeing systems more on the order of $200 a kilowatt hour.

- That's incredible.

- So it's been a 95% cost reduction.

I think we're still seeing costs coming down both in the materials themselves, the efficiency and the scale of production and then how somebody puts a whole system together.

So getting it transported to the site, getting it installed more efficiently.

- What part of the price are the materials?

- The battery itself is somewhere between 40 to, you know, 60% of the total cost of the system.

- Okay.

- And then the lithium is one part of that 40 to 60%.

So if you see big spikes, it has an effect.

[Scott] Right.

- A few years ago we saw, you know, big contractions in some of these inputs and materials kind of in the post-Covid period.

And so we saw run-up in the cost of batteries, but that didn't last very long.

And we sorted through some of these supply issues.

Some of it was extraction, some of it was processing, some of it was just general supply transportation conditions.

And so we've come back to this declining cost curve on storage systems.

- Right.

We are extracting the resource to build these batteries from the earth.

Like we think about oil or gas, coal, that's all coming from the earth.

Everybody knows that.

I don't think we think about batteries that way.

- Mm-hmm.

- The metals come from mining.

Are we doing much of that mining for lithium here or is it something that's an international kind of deal or?

- One of the interesting things is, before vehicle batteries or before batteries, we didn't really use very much lithium.

There wasn't that many applications for it.

So we didn't have a robust infrastructure looking for it and developing extraction technologies and techniques that are appropriate.

So there is plenty of lithium to go around and fortunately it is fairly widely dispersed.

So a little more than 50% of lithium is extracted from Australia.

- Okay.

- A little under 20% from China.

But there will need to be a concerted effort to open up and develop those resources, especially if we're concerned about kind of the international geopolitics of where this stuff's coming from.

- Yeah, I've read China does a lot of the processing.

- That's right.

You know, most of the metals and minerals processing for batteries is done in China.

A lot of the battery production, most of the battery production in the world is done today in China.

- Okay.

- There are new production facilities that people are beginning to start in Southeast Asia and Northern Africa, parts of Europe, to meet the needs of the future and to diversify that supply base.

- And diversification is good.

Optionality is good.

- Sure, yeah.

I mean I think we see in the United States in particular, this is one of the largest markets for electric batteries on the grid.

So having supply in the United States, having supply in countries that are close to the United States starts to make that supply chain more resilient.

And so we're starting to see those kinds of moves in the recent years.

- Good, yeah.

What's the lifespan of these large-scale battery systems?

- So that is one thing that whenever we talk to people about these batteries, they have experience with their cell phones.

- Yeah.

- And they know that their cell phone battery only lasts a few years.

And so we talk about lithium-ion batteries and these applications having a 15-year lifetime, that's really surprising.

And the biggest difference of course is, these are very well controlled, maintained batteries.

They're not getting, you know, left out in your car and getting heated up to 120 degrees or left in freezing.

So, a stationary application lifetime of something like 15 years, we can achieve that because of the, the controls.

- That makes sense.

What do we do with them when they wear out?

- One of the things that always comes up is, how many lithium-ion batteries are recycled?

Well, not very many because there aren't very many kind of reaching the end of their life.

So one of the best, great success stories of course is the lead acid battery.

Our recycling rates on lead acid batteries is 99%.

It is pretty clear that the recycling industry will develop to take advantage of these raw materials in the same way that we take advantage of recycling lead acid batteries.

- Yeah, you've got aluminum, you've got copper, you've got other metals that are valuable.

And we have seen increases in the factory.

So we've seen about a fivefold increase in the amount of recycling capability over the last few years.

There's a lot of facilities planned, mainly coming from cars first.

If I can eliminate the problem of disposing of it and I can get some materials out to fuel my process, that's better.

- Right.

- And so there are battery companies that have this as a part of their business.

- But we've had lithium-ion batteries in cars for a while, and we don't recycle many of them.

- Mm-hmm.

- Why aren't we?

Even on those, or lithium-ion batteries in our phones, you know?

- I think one of the challenges is just how do you collect 'em all and get 'em to a place and then process what you do with them.

And that's one big advantage of these stationary systems is that you have a whole collection of cells, they're all in about the same condition, you know, where they've been.

You're not pulling them out of a bunch of individual phones or cars.

And I would expect that those will probably be the system that are easiest to recycle.

- That's interesting.

We've all seen videos of Teslas burning, hard to put 'em out kind of thing.

Is that a risk in some of these large-scale lithium-ion battery plants?

- I think it's... We've been operating these for a decade and a half and have had very few events.

In the rare case where you do have that, you wanna contain it to a small area and you want it to burn out as quickly as you can.

We do a lot of large scale burn testing.

So we have a facility in North Carolina that we work with that we go and we take these systems when they're built, we deliberately initiate a fire - Okay.

- and we watch what happens.

There's materials inside the batteries that are combustible and that will burn and it will keep fueling a fire.

And so that's the danger.

And that we spend a lot of time in the system engineering and quality testing all the way through from the very start of manufacturing, you're doing quality testing to try to limit any possibility for that.

And then in the system design, we put together these large-scale batteries, we're looking at how is it operating?

Are we getting any indications that the cell voltage is deviating from what you would expect?

It gives you some sense that there's some kind of production error or some kind of fault or some kind of a short creeping in.

- And you can shut things down.

- You can shut things down.

- A lot of market-driven stuff here.

More recently in the U.S. at least, federal investments and things or subsidies, whatever we wanna call 'em, incentives.

How has that helped?

- So interestingly enough, a lot of the early deployments of storage there were some mandates to the state, California state mandate was one of those, but a lot of the storage that was, that's been deployed so far has not been under the tax credits.

Only recently with the Inflation Reduction Act, we now do have a tax credit for storage that will further accelerate the storage deployment.

So it makes it even more cost effective.

And a lot of these incentives are really just to kind of further accelerate the clean energy transition.

- Right, right.

Benefits, you know, what are some other benefits we could see?

- The kind of next frontier really is moving into the wires part of the electricity system.

So we've done some projects where on a long distribution line we put a battery at the end to help stabilize power flows over that location.

We have some projects that we're doing in Europe where we're building large-scale battery systems to get around impediments in the transmission system, where they have lines that get overloaded certain times of the year, but only for a relatively short time of the year.

And rather than rebuilding that entire transmission line, we're putting batteries there.

- Interesting.

- It substitutes and circulates around that impediment at a cheaper cost, and it adds to reliability of the system.

- Yeah, yeah.

Take out your crystal ball.

How do you see the growth on the grid?

- We see very, very large growth in storage for these kind of pure economic applications of providing peaking capacity in those hot summer afternoons, providing these balancing services to balance out the increased variability of the wind and solar.

So, you know, hundreds of gigawatts of storage in the coming decades.

- We're at 25 gigs now nationwide up from a few five years ago.

So 2040-ish?

- Yeah, so it's hard to say, but certainly, I don't see any kind of showstoppers in terms of the continued cost competitiveness of storage as a resource.

- Gotcha.

So what else could compete with lithium?

What do we doing today, other kinds of storage that are out there, comparatively?

- So there's really only one other big source of energy storage in the grid right now.

It's pumped hydro storage.

So you pump water up a hill and then release the water through a dam.

- Right.

- And we've got about 23,000 megawatts of pumped hydropower storage-- - And that's pretty affordable, isn't it, where you can do, where you the right topography, and?

- It was when we did it, the biggest problem with pumped hydropower storage is, you need two large bodies of water, and that requires either potentially digging a hole in the ground, damming something, and people don't like that anymore.

So all of the pumped hydropower plants that are being proposed would do something like using an abandoned mine for one of the reservoirs.

And so there's lots of interesting proposals for kind of the next generation of pumped hydro storage, hydropower storage.

[Scott] Other than pumped hydro, what are some things that are, you know, I've heard about, I mean like big flywheels, capacitors and other things too.

Are they just not affordable?

- So both capacitors and flywheels only store energy for a relatively short period of time.

So John was talking about this kind of regulation service where you're kind of rapidly responding.

Those were the types of things that capacitors and flywheels were originally developed for and deployed, we did deploy some flywheels, but with the price of lithium-ion batteries coming down so much, lithium's pretty much got that short duration, you know, kind of booked up right now.

- Got it.

That makes sense.

Other things on storage side that...?

- We see different variations of the lithium-ion formula, driven by R&D and economics.

And then people are looking beyond.

So they look at things like sodium ion as a new formulation or looking at solid state batteries that don't have a liquid electrolyte.

As they come, I think they just build on the case for storage, right?

- Yeah.

Yeah.

That's been great conversation.

Final thoughts.

You got good audience here.

What two or three points would you like to leave with them?

- You know, as we continue to get experience with this and put batteries on the grid, one key element of this is to continue to have safety be at the forefront.

Any kind of industrial transformation, whether it was, you know, building new factories for steel production or anything else, there's lessons we learn in that scale up.

I think we're seeing now storage move from where it was kind of a bit of a pipe dream maybe 10 years ago to being a real option that we're building at scale now on the generation side.

Well, now we're starting to see that move into the wires and the transmission side.

So I think that's a new frontier for storage that we'll keep going.

And then beyond that, I, you know, I would say we've seen this go from being a nice to have to something that's becoming very critical to managing a reliable power system and the systems that have the greatest amount of storage, we're seeing it really show up as a key element of their system reliability at the neediest times of the year.

So it's here and it's scaling and it's gonna be exciting to see where it goes.

- Yeah, it's good.

Paul?

- I like the idea that consumers won't even know it's in the grid.

They will continue to flip their lights on.

It will continue to be reliable.

Their bills will hopefully continue to be relatively low cost.

It will just continue to be added to the grid, continue to provide these reliability functions and most of us in the electric power system like to keep it that way where it's reliable, but people don't have to worry about where it's coming from.

- Right.

No, that's a good, good way to end things.

Final thing, what gives you hope?

What makes you hopeful in all this?

- I think the declining cost of these technologies has been really exciting.

The electric power system works really slowly.

It makes changes once or twice in a generation.

And it's been great seeing the decline in cost of wind and the declining in cost of solar, and now kind of this third missing piece because yeah, you can put a lot of wind and solar in the grid without storage, but you can put a lot more with storage.

- Yeah.

- I think what makes me hopeful about this is the innovation that it has spurred on, you know, I think it's allowed a re-envisioning of how do we serve some of the jobs on the grid with new technologies in a modern way.

And I think it's introducing, you know, a command and control of the system that takes us just to a whole new height.

- That's great.

That makes me hopeful.

We can have guys like you working on it.

Paul, thanks for being here.

- Thank you.

- Really enjoyed your thoughts and contributions.

John, thank you.

- Thank you very much.

- Scott Tinker, "Energy Switch."

Battery storage has many potential benefits: to balance the intermittency of wind and solar, to balance power irregularities on the grid, and a substitute for conventional peak generation when there's surplus energy to charge them.

Costs have fallen dramatically for grid-scale batteries.

They're down 95% over the last 15 years due to declining costs of battery technology and manufacturing, but also efficiencies and better practices in installation.

Subsidies could reduce costs even further.

Our guests said batteries are now cheaper to install than new gas peaker plants depending on the price of lithium and natural gas, of course.

Batteries may face some challenges, though, in materials supply and processing in China and recycling, the cost of scaling up, and the potential of fire at a plant.

Still, batteries could continue to grow rapidly from a relatively small level today.

To deliver on these promises, we'd need a lot more of them.

♪ ♪ ♪ ♪ ♪ ♪ [Narrator] Funding for "Energy Switch" was provided in part by The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.